0% - (-)% interest rates?

[Brakley]

I was listening to the discussion of @Andrey with the monero community and I had a lightbulb moment.

When Andrey mentioned the ability to mint private stablecoins on the platform I thought about the interest rates of the provide feature in the app and I started thinking. Could a system work where a user takes out a loan against their holdings minting stablecoins and have a 0% to negative% interest rate by opting to allow for their collateral to be provided to the AMM for liquidity? If this isn’t possible then just disregard this post. But if this would work it could be huge for adoption.

Maybe it could allow for 0% loans against any of the assets currently available in the provide tab and have $PRV be the only asset allowing for <0% interest rate because it has such a high % reward for providing to the AMM.

I would absolutely love this and I’m sure it would please a lot of you guys and bring a lot of adoption. What do you think?

[Katoshicoins]

Something like mStable ?
They give 10-20% returns on the mUSD that you mint
And they use balancer and uniswap as a DEX for their collective pools

In Return you could also earn MTA but thats another thing

[andrey]

Basically, you suggest an option when liquidity providers, instead of PRV reward, can get a loan with 0% or negative interest rate.

The collaterals are locked in liquidity and the borrower gets a loan in “Incognito” stable coin. Did I get it correctly?

It sounds interesting, the only problem to solve is the liquidation process. Let say if your collaterals hit a certain price, collaterals must be liquidated.

It means liquidity will be removed, and the asset has to be sold on pDEX. It might drive the price of the collateral even lower, which triggers other liquidations.

If we could solve that problem it might be something really interesting.

cc @duc

[Brakley]

Yes. There would be some kinks to work out like maybe these types of loans would have to be well over collateralized or something but as far as I know nobody else is doing this and could put us on the map.

[marko]

It depends on the terms… and I would like to see loans on BTC, ETH, Monero as well as PRV.

Advantage: Can this be a profit center for Incognito?

Disadvantage: It might delay more important things like improving security of user funds and decentralization of custodianship, decentralization of relying on a single fullnode, etc.

[Brakley]

I just think this is a service that the space is missing and Inc. I believe could pull it off. It doesn’t have to be anytime soon but down the road after other things are tackled.

I just don’t think that it’s fair to have to put up precious crypto so overcollateralized yet still have to pay such high interest rates.